SEC issues framework on banking sector recapitalisation

Applications To Be Reviewed, Filed Electronically

In a bid to support the Central Bank of Nigeria (CBN) recapitalisation programme towards achieving the targeted objectives, the Securities and Exchange Commission (SEC) released its framework on banking sector recapitalisation programme yesterday.
 
According to the SEC, the framework outlines the guidelines and procedures banks are required to follow to raise capital through rights issuance, private placements or other approved methods during the 2024-2026 recapitalisation period to ensure a smooth, transparent and efficient capital raise process by the banks.
 
Under the framework, the SEC mandated that applications/documents would be filed electronically, adding that documents forwarded would be reviewed, and where there are observed deficiencies, would be communicated to the applicants electronically.
 
The commission also disclosed that a penalty of N1,000,000 and re-filing fee of N100,000 shall apply where an application is returned for being incomplete, noting that the fee is payable by the issuing house without a recourse to the issuer or the issue proceeds.
 
SEC stated that an approval would be granted and communicated where deficiencies are communicated, timeline resets and in the absence of any deficiency.
 
The commission disclosed that the framework is an excerpt of the existing Rules and Regulations of the commission and should be read in conjunction with the relevant provisions of the Investment and Securities Act, 2007 and the commission’s rules and regulations.
 
“The commission may require other documents or information as may be necessary. Where an issuer had already filed necessary documents with SEC (e.g. Memorandum and Articles of Association (Memart) or certificate of incorporation or certificate of increase in share capital, etc.) the issuer need not file the documents in subsequent transactions, provided the issuer enters into an undertaking that since the previous filing, there has been no change in the documents already filed with the commission. Affected banks/Holding Companies are required to regularise/update their corporate information with the CAC prior to filing an application with the Commission” it added.

The framework, which was released on the commission’s website yesterday, serves as a comprehensive guide for banks/holding companies and market participants to navigate the recapitalisation programme effectively.
 
The move is driven by the recent directive by the Central Bank of Nigeria (CBN) for banks to raise additional capital to serve a $1trillion economy.
 
In the new CBN capital requirement, international banks are expected to raise their capital base to N500 billion, national banks to N200 billion and regional banks to N50 billion.
 
The commission said the framework would help to ensure that the capital raising process is conducted efficiently, transparently and in a manner that protects the interests of all stakeholders.
 
This is expected to serve as a guide to the banks/holding companies, issuers and capital market operators in filing applications for capital raise and/or mergers and acquisitions.
 
Other objectives of the framework are to guide in ensuring full disclosure of material facts in compliance with the Investments and Securities Act 2007, rules and regulations of the commission and other relevant laws, to ensure proper and timely review of the transactions.